The paper proposes a new method for capacitor placement in distribution systems. The problem formulation of capacitor placement may be expressed as a combinatorial optimization problem. As power markets become more deregulated and competitive, power quality issues are of major concern. A capacitor placement method is proposed to improve voltage quality. The proposed method integrates tabu search (TS) with variable neighborhood search (VNS) to evaluate better solutions. TS is useful for solving a combinatorial optimization problem. VNS plays a role to diversify solution candidates through creating different neighborhoods unless the solution is improved. The integration strategy helps us obtain a global optimal solution, or its highly approximate ones, efficiently. The effectiveness of the proposed method is demonstrated in a sample system.